In Plain English: Conditions or unconstitutional coercion?

Posted Thu, March 29th, 2012 8:00 pm by Amy Howe

After a lunch break, the Court returned at one o’clock yesterday for the final installment of oral argument in the health care challenges. At issue in the afternoon session was the constitutionality of a provision of the Affordable Care Act (ACA) which expands eligibility for Medicaid, the federal-state partnership that provides health care for the poor.

Under the ACA, states must make Medicaid available to a large number of poorer Americans. But if they do not comply with those new eligibility requirements, they risk losing all of the federal funds that they receive for Medicaid. The Court’s decision to review this question was an interesting one, as the lower courts that considered the question did not find any constitutional problems with the provision.

But the question is one that is near and dear to supporters of states’ rights: when Congress gives the states money with strings attached, can Congress eventually reach the point at which it put so many strings on the money that it violates the Constitution, because Congress is using the strings to accomplish things that it couldn’t require the states to do without the money? In two cases nearly fifty years apart, the Court has suggested that these kinds of conditions can amount to unconstitutional “coercion” on the states, but it has never actually had a case in which it found Congress violated the Constitution on that ground. Conservatives hope that this will be that case: Medicaid is such a huge budget item and so important, the states argue, that they simply can’t refuse to follow the new eligibility requirements and risk losing all of the money – and Congress knows it. So it isn’t a real “choice.”

Returning for his second argument of the day and his third argument this week, Paul Clement (who presumably has been sipping Gatorade during his marathon stints at the lectern) met a steady barrage of questions from the Court’s four more liberal members. Many of those questions centered around trying to get Clement to identify the point at which the conditions that the federal government puts on its grants to the states become “coercion.”

Justice Elena Kagan was first out of the box, and she quickly proved once again that she is the Court’s official Plain English Justice. Asking Clement about a hypothetical scenario in which the federal government would provide one hundred percent of the funds for a program but the states would still object because they could lose all their Medicaid funds if they refused, she described the situation as “just a boatload of federal money for you to take and spend on poor people’s health care.” Along the same lines, Justice Sonia Sotomayor asked Clement to provide a concrete number at which federal funds and their accompanying conditions might become coercive: would it happen when a state provided ten percent of the funds used for Medicaid there, with the federal government providing the rest? If a state is bankrupt and can’t pay for Medicaid all, she asked, would Clement’s theory bar the government from paying for all of that state’s Medicaid program if it wanted to put conditions on how the money could be used? Justice Ginsburg chimed in, asking Clement why his theory wouldn’t apply whenever something is “too good to give up.”

Clement tried to address these concerns by outlining what he described as some of the specific features of this Medicaid expansion provision that made it coercive. In particular, he emphasized that if states do not comply with the new eligibility requirements created by the statute, that failure to comply puts them at risk of losing not only the federal money for the people who would otherwise be eligible under the new requirements, but all federal funding for Medicaid. However, Justice Breyer quickly challenged him on this argument. Reading the statute out loud, Breyer asked Clement whether the Secretary of Health and Human Services (who is in charge of doling out the Medicaid funding) was required to cut off all federal funding if a state doesn’t comply with the new requirements. On Justice Breyer’s reading of the statute, if the state didn’t want to make the additional people eligible for Medicaid, the Secretary could then refuse to give them the money for those people. But if it wanted to do more than that, Justice Breyer continued, such as cut off all Medicaid funding, the state could always go to court and challenge the denial of the additional funding. If the Secretary’s decision to deny all funding was unreasonable – which, Justice Breyer suggested, it very well could be – then the court could overturn it under the laws governing how federal agencies are supposed to operate. Clement responded, however, that the Medicaid expansion provision is still coercive based on the prospect that the Secretary could decide to cut off the Medicaid funding.

With Clement’s time winding down, virtually all of the substantive questions put to him had come from the Court’s liberal wing. But as he tried to sit down and reserve a few minutes for his rebuttal, the Chief Justice – in an unusual development – kept him at the lectern for what would turn out to be an additional ten minutes, telling him: “I’m not sure my colleagues have exhausted their questions.” During that time, some of the Court’s more conservative Justices joined the fray, asking questions that expressed at least some doubt about Clement’s position. Both Justice Scalia and the Chief Justice, for example, pressed Clement to clarify where the coercion came into play: “Is it the amount that’s being offered,” the Chief Justice asked, “that it’s just so much money, of course you can’t turn it down, or is it the amount that’s going to be taken away if you don’t take what they’re offering?” And Justice Kennedy wondered aloud why the expansion provision really infringed on states’ rights if – as Clement appeared to agree – the federal government could instead just decide to skip the partnership with the states and provide health care to the poor itself.

After Clement, Solicitor General Don Verrilli was back for his third day of arguments this week. Much as the liberal Justices had pushed Paul Clement to specify the point at which conditions become coercion, during the second half of the argument members of the Court’s more conservative wing urged Verrilli to agree with them that there are some limits on the strings that the federal government can place on its funding, and to identify those limits. Otherwise, the Chief Justice reasoned, the limits that the Constitution imposes on what the federal government can ask the states to do are “largely meaningless.”

Several Justices, from both ends of the ideological spectrum, homed in on the question that Justice Breyer had asked during Paul Clement’s argument: whether it matters that the ACA does not require an immediate cut-off of all funds when states refuse to comply with the new eligibility requirements. Verrilli assured the Court that the Secretary would never strip states of all funding based on minor infractions, but he was reluctant to concede that the law placed actual limits on what the Secretary could or could not do.

At the end of his argument, Verrilli seized an opportunity not only to summarize the federal government’s position on the Medicaid expansion issue, but also to deliver closing remarks on the litigation as a whole. In particular, he tried to emphasize the positive impact that the ACA could have on individuals, especially the poor, telling the Court that, as a result of the Medicaid expansion, “there will be millions of people with chronic conditions like diabetes and heart disease, and as a result of the health care that they will get, they will be unshackled from the disabilities that those diseases put on them and have the opportunity to enjoy the blessings of liberty. And the same thing will be true,” he continued, “for a husband whose wife is diagnosed with breast cancer and who won’t face the prospect of being forced into bankruptcy to try to get care for his wife and face the risk of having to raise his children alone.” Verrilli urged the Court to leave the ultimate decision on the ACA to the democratic process.

After Clement’s rebuttal, the Chief Justice thanked all of the lawyers who had appeared at the Court this week, and the Court adjourned. The Justices will vote on the case at their private Conference, and they will then begin the herculean task of drafting opinions to reflect those votes. When they are finished, which will almost certainly be at the end of June, and not before, we will analyze them in Plain English.

Upcoming Oral Arguments

3/31Kimble v. Marvel Enterprises, Inc. Whether the Court should overrule Brulotte v. Thys Co., which held that “a patentee’s use of a royalty agreement that projects beyond the expiration date of the patent is unlawful per se”.

4/20Johnson v. United States Whether possession of a short-barreled shotgun is a violent felony, leading to a longer prison term as a career criminal.

4/21McFadden v. United States A federal prosecutor’s duty to prove that a suspect knew that a substance was an illegal substitute for a banned drug.

4/22Horne v. Department of Agriculture The federal government’s duty to pay raisin growers for an order requiring removal of part of a year’s crop from the market to stabilize prices.

On Monday afternoon Justices Anthony Kennedy and Stephen Breyer testified before the House Appropriations Committee. The purpose of the hearing was to discuss the Court’s budget for the next fiscal year and the federal judiciary, but the legislators also took full advantage of the occasion to touch on other topics as well.